FDA May Prosecute More Pharmaceutical Execs
59 CommentsBy Ed Silverman // March 4th, 2010 // 8:43 am
The FDA plans to increase misdemeanor prosecutions of industry execs as it looks to refocus its Office of Criminal Investigations (see this letter to the Senate Finance committee). The move comes in response to a new report from the General Accountability Office that the OCI suffers from lax oversight, despite increased in funding and staffing over the past decade. In fact, the FDA hasn’t reviewed most OCI offices in more than three years. The OCI investigates counterfeit drugs and other bad stuff, as well as misconduct by FDA employees.
The GAO concluded the FDA “has relied largely on the OCI director to determine which aspects of OCI’s operations and investigations are made known to FDA’s top management.” The GAO found assessments of six OCI field offices aren’t being done on a timely basis. Of 24 total office assessments that should have been completed by August 2009, only 7, or about 30 percent, were completed and one office hadn’t been assessed in over 10 years.
In addition, the FDA lacks performance measures that could enhance oversight by allowing it to assess OCI’s overall success. A few more facts: the OCI has a 230-person operation with more than $41 million in funding. In 2008, the group’s investigations led to more than 400 convictions. The OCI budget rose 73 percent between 1999 and 2008 to $41 million, and the number of employees increased by about 40 percent.
The GAO study, which was first reported by The Wall Street Journal, was requested by Chuck Grassley, the ranking Republican on the US Senate Finance, who has been probing drug safety issues, among other things. A report on GlaxoSmithKline’s Avandia noted that several drugmakers - Pfizer, Lilly, Bristol-Myers Squibb - have recently paid large criminal fines totaling $7 billion. Among the infractions - off-label promotion. This is not the first time Congress has leaned on the FDA’s COI (see here and here), and the Senate report continued to do so by concluding that “such an environment requires diligent oversight by the FDA to protect the citizens of this country and to ensure the safety of American medicine.”
Maybe criminal defense lawyers will be in vogue?
patrons99
“Maybe criminal defense lawyers will be in vogue?”
Bingo! It’s about time! FBI and DOJ’s Criminal Division need to also be involved! FDA might need a little “oversight” too, for failure to investigate and failure to prosecute.
ex-FDAer
In 2008 responsibility for investigating FDA officials was taken away from OCI and returned to the HHS Inspector General. This unusual arrangement was unique in the Federal Government and began in 1998 over the objections of the HHS inspector general. Until this responsibility was removed from OCI whistleblowers or suspected whistleblowers were routinely investigated and harassed by OCI. At least two cases [phen-fen - Leo Lutwak (1998); and antidepressant induced suicides - Andy Mosholder(2004)] were reported in the press.
The change in responsibilities was announced in 2007 and was at Senator Grassley’s prodding.
If you want a corrupt system first you corrupting the politicians, then you corrupt the senior officials, and then you corrupt the police.
patrons99
For some of us, these “corrections” in the system to address RAMPANT white collar crime in the drug industry, are coming about 10 years too late. There are about 100 legal filings at the scribd website to support this assertion. A representative sample is found here:
http://www.scribd.com/doc/17300805/Document-19-Amended-Complaint-and-Exhibits
http://www.scribd.com/doc/17301455/Supplemental-Brief-and-Appendix-in-Support-of-Petition-for-Writ-of-Certiorari-071525
Anne PME
I have not had time to read the GAO report and hope to do so a little later….thanks for posting, Ed.
QUESTIONS: Was FDA OCI originally developed in part to function as an independent investigative unit like the police department’s internal affairs unit?
Is there a seperate department of the FDA that conducts these type of investigations, or is FDA OCI responsible for both internal FDA employee investigations and the investigation of criminal allegations involving food and over the counter and prescription drugs?
Anne PME
Thanks for the explanation Ex FDAer.
Jeff Kindler
Oh Ed, you forgot about Terry Vermillion’s big bonus.
http://www.pharmalot.com/2008/06/what-recession-big-bonuses-for-fda-brass/
pharmavet
Before we get ourselves in a twist, remember that these are international companiea and that all of these CEO’s are wealthy enough to buy (or have already bought) retirement homes in countries that do not have extradition treaties with the United States. At the first whiff of trouble they will “retire” to their sanctuaries and will be beyond the long arm of U.S. law. I guarantee that you will not see any of these guys doing a perp walk or wearning an orange jumpsuit.
where is my handout
basically, all these agencies do nothing all day long.
not suprised by this report at all.
Concerned Citizen
It’s way overdue that these execs be held responsible for their actions. However, I think that felonys should also be pursued. Much of what has been done results in the harming of patients as well as the fraud of multiple payer groups. I don’t believe that the hammer will be hard enough to put a stop to the long-standing corrupt practices of pharma. Felony convictions, huge personal fines and jail time will be critical.
Justice in MI
This is a brief response to Anne’s post. What ex-FDA’er reports was news for me, so this will be open to amendment.
My understanding is that OCI was established in 1992–a Kessler initiative–especially in response to the generic drug bribery scandal. It was, in essence, FDA’s liaison with the DOJ and under Regulatory Affairs. OCI was involved in the recent Pfizer busts, for example. I didn’t know that “internal investigations” were also part of their authority.
Justice in MI
OCI’s home page on the FDA site is, at the least, informative.
http://www.fda.gov/ICECI/CriminalInvestigations/default.htm
patrons99
ex-FDAer - “Until this responsibility was removed from OCI whistleblowers or suspected whistleblowers were routinely investigated and harassed by OCI”
I would argue that even after this responsibility was removed from OCI FDA was guilty of failure to investigate and failure to prosecute. Why? Lack of oversight and COIs. The COIs are too numerous to count. Any and all pending NDAs and sNDAs represent major COIs for FDA to seriously investigate allegations of research and/or insurance fraud, especially under PDUFA timelines.
http://www.scribd.com/doc/17300818/Letter-of-October-17-2001-from-the-Department-of-Health-and-Human-Services-
Justice in MI
The impression one gets from the various reports is that OCI was essentially running (and not running) its own show–with minimal accountability, reporting, or oversight. Sounds like it has been a “good gig” for those who could get it–kinda like hanging out at the donut shop.
ex-FDAer
The office in FDA inappropriately investigating FDA whistleblowers was Office of Internal Affairs (OIA) not OCI as I previously stated.
The announcement and documents from the Senate Finance Committee may be found at the following links.
http://finance.senate.gov./press/Gpress/2007/prg112907.pdf
http://finance.senate.gov./press/Gpress/2007/prg112907a.pdf
http://finance.senate.gov./press/Gpress/2007/prg112907b.pdf
SteveM
I’m not a lawyer, but I think most federal agencies can only engage in civil prosecution. i.e., fine people/organizations. Criminal prosecution of individuals must come out of the Justice Department.
If that is true, then any in-house FDA investigations of corporate malfeasance that are not turned over to Justice won’t send anyone to jail (where they may belong.)
Can someone with a legal background clarify?
Former Pharma Marketing Director
I think the execs should be held criminally responsible. While I have to agree they do all probably have retirement homes in countries that do not extradite, certain tactics can and should be used to fine or even stop the company from doing business in the US until the exec is punished. Or you go after their American Citizen next in rank…
This is probably the most interesting step I have seen in a long time. It certainly has some “teeth” to it…
What a good day, we need to continue more along these lines….
patrons99
Well said, former pharma. What a good day, indeed. Maybe there is now hope that the crime spree will end.
Justice in MI
re: Steve M’s question, this from the DOJ summary of the Pfizer busts. It suggests DOJ took the lead on the criminal side, but the OCI was at least “involved”:
“The U.S. Attorney’s Office for the District of Massachusetts led the criminal investigation of Bextra. The investigation was conducted by the Office of Inspector General for the Department of Health and Human Services (HHS), the FBI, the Defense Criminal Investigative Service (DCIS), the Office of Criminal Investigations for the Food and Drug Administration (FDA), the Veterans’ Administration’s (VA) Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management (OPM), the Office of the Inspector General for the United States Postal Service (USPS), the National Association of Medicaid Fraud Control Units and the offices of various state Attorneys General.”
Regarding the general development, Hamburg has been talking about greater use of legal sanctions for some time, and the Pfizer busts were clearly intended to be one example. Two Pfizer execs were individually busted in connection with that, including one on a felony count.
So I’m not sure we’re seeing anything much new–I guess we’ll see. We are certainly a very long way from jail time.
Doc
Only by jailing execs, if proved involved in criminal activity, will most of the shenanigans that endanger public health stop.
Anne PME
Thanks for the messages Justice and Ex FDAer.
OK, so I have had a long day capped off by a lot of bloodwork but wanted to know whether or not it is agood thing or a bad thing that FDA OCI did not need to divulge info about their investigations to Daniel Troy….I am thinking that this might have been a good thing…FDA OCI are likely lifetime agents…political appointees serve at the will of president, and when the administration leaves office (or depending on the circumstance, before) they generally head back to the private sector and may take jobs working for the companies that they previously were responsible for overseeing.
A few years back Bristol Myers Squibb was caught channel stuffing. They oversold product so that they could meet financial goals. During this time, the drug wholesaler secondary subsidiaries would buy and sell- they would trade prescription drugs to increase profit by buying large amounts before price increases, stockpiling, returning and or selling to get the inventory off the books.
BMS ran into financial problems and one of the things that pharmaceutical companies do to help stem financial losses is limit drug returns…this happened at BMS…because of the previous channel stuffing, aged drugs thta may have been needlessly traded/exposed to elements that might make them less reliable were likely dumped on to the market and dispensed to patients, potentially at increased prices. It is like paying Rodeo Drive prices for dollar store drugs…might be worth the risk for salad dressing but probably not worth the risk for cancer, cardiac or other prescription drugs.
IS this illegal? Under securities regulations,I am pretty sure it is…but I am not sure that it is illegal under FDA regulations, so maybe it would make sense to try to achieve cohesiveness so that FDA regs give patients and citizens the same or similar protections as those that stockholder now have under Sarbox and other sec regs.
I would ask the judge in the salad dressing case who railed on FDA OCI to name one prescription drug that IMPROVES with age and/or uneccessary trades…
Reference- Note that this is out of the University of MD…
http://www.lib.umd.edu/drum/bitstream/1903/2304/1/EOQ_convex_holding_cost_18_July_05.pdf
Note: An Application of the EOQ Model with Nonlinear Holding Cost to Inventory Management of Perishables
Authors: Souza, Gilvan
Ferguson, Mark
Jayaraman, Vaidy
Type: Article
Keywords: Inventory
EOQ model
Retailing
Perishable products
Issue Date: 19-Jul-2005
Abstract: We consider a variation of the economic order quantity (EOQ) model where cumulative holding cost is a nonlinear function of time. This problem has been studied by Weiss (1982), and we here show how it is an approximation of the optimal order quantity for perishable goods, such as milk, and produce, sold in small to medium size grocery stores where there are delivery surcharges due to infrequent ordering, and managers frequently utilize markdowns to stabilize demand as the product’s expiration date nears. We show how the holding cost curve parameters can be estimated via a regression approach from the product’s usual holding cost (storage plus capital costs), lifetime, and markdown policy. We show in a numerical study that the model provides significant improvement in cost vis-à-vis the classic EOQ model, with a median improvement of 40%. This improvement is more significant for higher daily demand rate, lower holding cost, shorter lifetime, and a markdown policy with steeper discounts.
URI: http://hdl.handle.net/1903/2304
Appears in Collections: Decision, Operations & Information Technologies Research Works
David, Health Blogger
I was thinking about this very issue and came to a similar conclusion.
Executives are comfortable making decisions that will make $1 billion in profit for their firm and “only” cost them $500 million in damages.
If they could get into real trouble for being responsible for public health disaster after public health disaster, things would be better.
David, Health Blogger
Let me elaborate, as I didn’t fully explain the thought.
Basically, the economics of the situation provides a real incentive for malfeasance.
If it is just a number game, then, ignoring moral issues, executives just see that $1,000,000,000 - $500,000,000 = $500,000,000
The only way to stop that is to add a personal element so that it’s no longer just about numbers.
Of course, companies can take that $500,000,000 and spend a few million buying the votes needed to keep problems like that out of their hair…
Justice in MI
Coupla quick points…
My impression is that most of the OCI folks are career cops who worked in other “enforcement” contexts before FDA.
Not clear to me that Troy/Legal Counsel’s Office would not have had significant influence on what OCI did and did not do. Troy was Chief Counsel from 2001-04, when OCI was still very much under overall FDA roof.
Would repeat that fining execs–especially with misdemeanors–is not new. Before the OCI, there were the Selacryn and Oraflex cases of the 80s, similar to the Pfizer busts in that both the companies and individual execs were fined. Didn’t mean much.
John Braithwaite, whose _Corporate Crime in the Pharmaceutical Industry_ remains one of the best books written on this_, talks about the importance of having a “the Vice President in Charge of Going to Jail.” And, even then, essentially no pharma execs have ever gone to jail.
As far as “discincentives,” tort liability far outweighs potential OCI/DOJ actions. Consider that the Pfizer bust of $2.3 B was the largest fine in history. Fen-phen has cost Wyeth $20 B. At that point, it’s probably not just “the cost of doing business.”
Justice in MI
I should probably clarify point re: Troy’s office. While it seems true that there was little institutionalized oversight of OCI, that would not preclude less “formal” arrangements. Indeed, it would facilitate the possibility.
SteveM
Re: Justice in MI
Thanks for the postings and the legal insight.
About the nature of the penalties, I read someplace that jail is not a deterrent for the average con. Cost of doing business. He figures he won’t get caught. And if he does, he just sucks it up and does the time.
But jail IS a deterrent for white collar guys who want to live anywhere but there.
That said, huge tort judgments may be still non-compelling for the corporate slob who risks no time in the can.
Which begs the question. Forget crippling the shareholders with huge civil judgments. Stop the insanity by sending the execs up the river.
Comments?
SteveM
Former Pharma Marketing Director
The thing that I find troubling is that we as a society empower corporations. People cannot create corporations and then hide behind them while they commit various grievous crimes against humanity.
If you have knowingly caused harm by hiding data, altering data or knowingly misled the researchers, doctors and patients that sounds to me like fraud.
I would go even further perhaps and say that some shareholders should be tried for aiding and abetting a criminal.
Steve M. I am sure you know this already, but you are using “begs the question” out of context. You mean “it raises the question”. Beg the question means: The fallacy of petitio principii, or “begging the question”, is committed “when a proposition which requires proof is assumed without proof.”[2] More specifically, petitio principii refers to arguing for a conclusion that has already been assumed in the premise. The fallacy may be committed in various ways.
Jaynesday
Will this proposal by the FDA really change the business practices of the industry or will it cause it to be more careful in covering tracks and protecting the guilty?
The chance for multi million dollar returns on investment, whether ethical or not are still very tempting. Adding a few million more to legal fees or cover is easy to do.
Shareholders will still pay a pretty penny for CEO’s that will walk the ethics tight rope.
Formally exposing unethical companies to the public in an organized way (whatever that might be) would top financial penalties and CEO misdemeanors by a long shot.
Think outside the box. The true force for change in any entity that involves public money is the awareness of the public about the trustworthiness of said entity. Anything less is just dancing around the problem.
Until the FDA can implement something that will truly cause corporations to self correct, the more the FDA will need to continue to expand its size and scope. If this is the course the FDA intends to take we will see it become even more ineffective in the future.
The FDA needs to “privatize” its function so to speak. Use the public power that is available to it. And then cut your budget.
pharmavet
I’m in pharma but I’m also a shareholder in most publically held drug companies. Without naming names, all of these companies have continued to pay me a nice dividend for the past 20 years irrespective of how the companies were doing financially. Notwithstanding the merits of the above arguments, why would I, strictly speaking as an ordinary shareholder want anything adverse to happen to these companies that might negatively affect my portfolio. The reality is that shareholders will keep on electing the same Directors as long as the dividends keep rolling in.
It is indeed a numbers game, both on the company side and on the shareholder side.
patrons99
FPMD - “…while they commit various grievous crimes against humanity.”
Why isn’t this front page news anymore? Have we as a society grown so hardened and accustomed to this, that we’ve just decided to tolerate it and let it slide?
How many more “grievous crimes against humanity” are we going to tolerate, before DOJ Criminal Division gets serious about stopping it?
Jaynesday
pharmavet, I agree, shareholders require a return on their investment or they move to another company. By exposing the unethical companies the good companies thrive and the bad cease to exist.
To reply to your question - “why would I, strictly speaking as an ordinary shareholder want anything adverse to happen to these companies that might negatively affect my portfolio?”
I would say then that you sir/madam, you are part of the multitude of problems we discuss here daily.
Jaynesday
patrons99
Excuse me for jumping in but it relates to the point I am trying to make.
You ask - “Why isn’t this front page news anymore?”
I think the ethical wasteland in pharma has become the norm but also our pharma industry is expert at not crossing the line of public outrage. They know how far to push the envelope, they’ve been doing it for decades with really no one to answer to of any real consequence.
Certainly they don’t want to wake up the sleeping giant as they steal the beans.
pharmavet
Jaynesday, it’s not my quote, but the stock market is morally neutral. It doesn’t really care how I or anyone on this board feel. It is like the shark in “Jaws”. It is constantly moving, rewarding risk and punishing failure, and like that shark it doesn’t really care what filters through its gills. As long as the dividend line on the Form 1099 reads positive instead of negative on December 31, I can honestly say that most shareholders don’t care either, just like that shark.
Jaynesday
pharmavet -
True indeed.
Sorry for quoting you for a general statement. I understand your position now.
JaT
When drug makers pay fines for criminal activities who exactly are they paying them to?
JaT
What I’m getting at is this:
I suspect the payments go to DoJ(?). But then, if anyone at FDA is prosecuted, do we have one government entity paying another? Not likely. Job losses are not unimportant but misdemeanors? Heck, anyone can lose a job for not doing it properly- without the broad ability to endanger so many people. So are we talking about personal fines for them? They can file bankruptcies. Misdemeanors rarely result in too much jail time, if any.
The potential for reform isn’t lost on me. Holding hope.
patrons99
The FDA’s OIA can’t help but have a “chilling effect” on would-be whistleblowers. In the wrong hands, such information could be put to extortionate use by senior FDA management. What’s really needed is strict governmental oversight over FDA’s senior management. The senior management has too many COIs, not the least of which is the “revolving door” policy between pharma and FDA management.
FDA should not have an OCI. It doesn’t make any sense. Again, too many COIs. Pharma’s biggest client (FDA) can’t be expected to ever cause any substantive injury to the franchise (pharma), unless it’s just a staged “event”, solely for public consumption.
DOJ Criminal Division, and FBI, have to lead the way in monitoring FDA, and in aggressively investigating and prosecuting pharma’s ongoing crime spree. It’s the senior FDA management that pose the greater threat to public welfare, not the junior staff. There need to be greater whistleblower protections, not fewer!
Under the current system, there is no regulatory oversight over FDA management. FDA has shown a long pattern of regulatory malfeasance, i.e. repeated failures to investigate and repeated failures to prosecute clinical research and/or insurance fraud.
Justice in MI
Coupla more points—
Re: Steve M.’s comment, truth is that no one is talking (at least not Commish Hamburg) about anyone going to jail. Just about misdemeanor civil stuff.
If the fines are for illicit promo, like the recent Pfizer busts, the payments go to the entities that were defrauded–Medicare, Medicaid, postal serive, armed forces, etc..
How about this fantasy–a portion of all marketing fraud penalties go into funding an EBM counter-detailing initiative…?
Anyhoo, most of the relatively few cases OCI opens never make it to fora like Pharmalot. They are for unapproved products, quack ingredients, that kind of stuff–rarely, “big pharma” issues.
patrons99
Jaynesday -
“…our pharma industry is expert at not crossing the line of public outrage. They know how far to push the envelope, they’ve been doing it for decades with really no one to answer to of any real consequence.”
This could all change IF, and this is a BIG IF, professional federal investigators and prosecutors, i.e. DOJ Criminal Division and FBI, were to get serious about shutting down the crime spree, and simply bring to bear all the tools of their trade, e.g. criminal RICO Act, Federal Wire Tap Act. The pharma industry acts in concert and is a very real criminal enterprise.
The pharma industry is a criminal RICO enterprise that is committing large-scale crimes against humanity in a pattern of racketeering activity. There must be a reckoning…an accountability and real consequences for it to ever be stopped.
Duane Sherry, M.S.
Once again, “misdemeanor charges”…
Always the same thing….
In the area of psychiatric drugs (they are drugs, not medicine), these guys keep getting hit with “misdemeanor charges,” which lead to “misdemeanor convictions”…. for true criminal behavior - of the felony variety - injury and death to kids - about as bad as it gets!!!
Call me a skeptic, but this is a game of “good-cop” - “bad cop”…. The FDA and Pharma… What a joke…. What an absolute joke !!!
This is like an old sixties movie of an interogation room…. One police officer ready to slap a man down, and the other one saying, “C’mon, man..cool down.”
The FDA doing investigations into criminal wrongdoing?
U.S. Attorneys…. felony charges, and jail time… That’s when we’ll be watching real justice at work…. Not a day before !!!!
Passionately,
Duane Sherry, M.S., CRC-R
Condor
We all chat a fair bit around here, about how much we think more Chairmen and CEOs ought to go to jail (when outrageous conduct is uncovered). We say so because we see it as one of the few real detterents to white collar crime — and we all lament that it rarely happens. Myself plainly included.
Well, tonight, Bloomberg reports that Ex-McKesson Chairman “Cooked Books” Charlie McCall (a large cap public drug distributor) is finally being sentenced. He was also CEO of HBO, a software company that McKesson acquired before the board named him Chairman and CEO.
McCall was sentenced today to ten years.
McKesson, for its part, will now file a civil suit seeking to recover $10 million from MCall, personally (for concealing a scheme to inflate revenue at the drug distributor) — the amount by which it says the company was damaged. That figure seems a little shy, given the company has already paid-out $960 million — to various groups of McKesson shareholders — to settle securities fraud claims stemming from McCall’s malfeasance. [I think the theory here is that the fraud was pretty widespread inside the company.]
While “Cook-The-Books Charlie” didn’t get sentenced to the maximum jail-time allowed for his crimes (the time the prosecutors wanted — 20 years), these 10 years are no walk in the park, either (he’s already 65) — even if he only does half of that time, he’ll be a much weaker, older man when he leaves the federal penal system.
Just thought I’d point one out. A rare one, but one example of the system finally getting it (mostly) right.
Condor
Duane Sherry’s was posted while I was writing mine above. It reminds me that the problems of proof for felony convictions (related to FDA violations) is a tall order, insodar as getting the CEO on the hook is concerned.
So many layers of shrugging management, in FDA filing violations — on the other hand, CEOs must personally review, sign and attest to the accuracy of the financials — or at least attest to the system of controls being properly designed to deter fraud.
Maybe that is what ought to happen with FDA filings — a CEO signature requirement — that the science and studies have all been conducted under a systeme designed to prevent mistakes — or worse. If that turns out to be untrue, the CEO may be sent to the slammer.
That is the way to get ‘em — or, you’ll have to figure out where the violations are fraudulently inflating revenue, or EPS.
Namaste
patrons99
Condor - Great idea! As you suggest, why not require a CEO signature requirement with each FDA filing? Wouldn’t that be very similar to a SOX (Sarbanes-Oxley) compliance statement? The penalty for noncompliance could/should be permanent debarment from Medicare reimbursement for the corporation and potential criminal jail time for the CEO. Help me out here. How does SEC and/or DOJ handle SOX compliance violations? Are they rigorously enforced? Who has jurisdiction over them?
patrons99
Some corporations make a habit out of violating so-called Corporate Integrity Agreements (CIAs) with DOJ. They laugh all the way to the bank while doing so. Why put some “real teeth” into CIAs? For example, ANY violation should result in automatic, permanent debarment from Medicare reimbursement for the corporation and potential jail time for the CEO. How many violations do we think there would be if CIAs had “real teeth” in them, not just fines? Aren’t CIAs basically just a plea-bargain anyway? To date, have any large monetary settlements with DOJ really slowed-down the crime spree?
patrons99
Yikes. Botched my comment:
“Why [not] put some “real teeth” into CIAs?”
Condor
Hey patrons99 –
I think most commenters feel that SoX, particularly the analysis of internal controls provisions (while expensive and cumbersome, at first) have actually cleaned up a lot of questionable accounting — with the “big stick” fear of jail time for the CEO and CFO.
I think it is an idea worth pursuing, though financials admit to a FAR more exacting set of fraud-checks, and internal control mechanisms, than do FDA required studies, basic R&D, etc.
I think — as ever — the devil would be in the details, primarily how to define what conduct, and procedures, would be covered under the CEO’s, and Chief Science Officer’s sworn, written attestations — to FDA.
Perhaps I’ll drop Chairman Waxman’s staffers a line, and see if they might ask after the idea with FDA’s Mr. Sharfstein, on Wed. afternoon.
Yep — I think I will.
Let’s see if it makes into the hearing remarks, or questionings. That would be a hoot!
Any takers on a bet — as to whether it gets asked? I (even though I am making the call!) will lay 2 to 1 against.
Namaste
Justice in MI
There are certainly precedents for CEOs getting jail time–Enron, etc.. But I don’t think there’s ever been a “big pharma” instance (there may be “small pharma” ones–people whipping up potions in back yard, etc.)
As Braithwaite notes, there are precedents for holding top managers criminally responsible for what went on in their company, even if they genuinely were not aware of it. “Deniability” generally built into the organization in the first place.
Condor
JiM — just to be clear, Cooked Books Charlie McCall (at McKesson) is a BIG Pharma precedent (ten years) — he was selling vast quantities of FDA approved meds — they were just MADE by other companies; McKesson was the reseller/distributor to pharmacies, and hospital chains.
Namaste
Jaynesday
Seems to me (and then I’ll exit this soap box) that it might be good to skip the middle man all together in this particular process. By middle man I mean legal action.
Go to the source of the profit - the consumer.
Establish true transparency. So with every prescription the latest real time data on the drug/device performance, issues and cost (graded against a norm). Also a thumbs up or down rating on the company itself, call it a “trustworthiness rating”… or something. All reviewed with the doctor and patient at time of prescribing.
The critical point of judgment about a company and its product would take place in 30 minutes in the doctor’s office with the patient, not in a court of law after years of litigation. The red hot focus of a pharmaceutical company would become exactly and exclusively where is should be, in that office.
I may be wrong but I hope that pharmaceutical companies don’t need to be ethically bankrupt and produce crap to maintain their business. But if they do maybe we’ve outrun the boundaries of our technical capability to support the size of the current industry and we need to make some difficult decisions.
Hard Questions –
1. Has this industry been able to overgrow its market only because its product is beyond the real understanding of its consumers and their doctors?
2. Has the FDA aided and abetted this overgrowth for fear of standing in the way of corporate profit?
Justice in MI
Thanks for the heads-up, Condor. I guess book-cooking not in my usual kitchen.
Re: Jaynesday’s comment, yes, I think would be great. The big question would be who would create such a rating/info system. As we know, lots of folks would not trust the feds. And only a few follow Public Citizen’s stuff, although much of it is there.
My students (are you out there?) tell me that they rarely even read the stickered warnings/insructions on an rx bottle. My guess is that they are pretty typical…So I think it will be docs who have to do, or not do, what’s required. And that’s a long story….
Likewise, the FDA, which I believe can be interpreted both ways depending on different phases of its history in conjunction with different phases of the industry’s history.
Duane Sherry, M.S.
I’m grateful for U.S. Senator Grassley - particularly, in the area of protecting children from “off-label” prescribing… or at least doing all one person can do to get the truth out…
How much fraud is there in research?…
From the Alliance for Human Research Protection -
http://www.ahrp.org/cms/index.php?searchword=fraud&option=com_search&Itemid=5
Chilling.
Duane
Jaynesday
Justice, in answer to your question about who would create a rating and information feedback system - It would take someone a lot smarter and better connected than me to work that out.
Fortunately I’m outside the pharma box and can only deal in generalities. Peering into the box as I have for a number of years now, a few things are obvious. This industry has grown so big and powerful that it has enabled itself to disconnect from its responsibility to its consumer. In effect it is a monopoly and can dictate its own future regardless of its true performance or ethics. It owns its oversight authority and the financial consequences for its bad actions are too far below its level of tolerance.
So generally speaking we must reconnect control of the industry’s performance to the source of its income, the consumer. That is your student’s technical question. Nothing but this will cause change in the industry.
We now have the computer technology to do this. We can overcome the disparity of knowledge between the industry and the consumer and allow the free market to weed out the bad players.
The industry has overtaken the FDA, Congress, the Presidency, the courts (or are attempting to) and they are able to control through marketing the product that people “need”.
The only power greater than the pharmaceutical industry now is the power of the free market. Currently the pharmaceutical market is not free. It’s been bought by the industry.
David, Health Blogger
Corporation, noun. An ingenious device for individual profit without individual responsibility.
harpy
“…but the stock market is morally neutral. It doesn’t really care how I or anyone on this board feel. It is like the shark in “Jaws”. It is constantly moving, rewarding risk and punishing failure, and like that shark it doesn’t really care what filters through its gills”
I, for one, am glad to hear how the “moral neutrality” of the stock market absolves you of all your personal moral responsibilities and allows you to overlook the fact that the inconvenient fines that have no effect on your bottom line reflect the pain and suffering of fellow human beings. Well done, sir!
pharmavet
Thanks for the comment, Harpy. I was a bit tardy getting to the Pharmalot Board. Please do not be offended that prior to reading your comment I had spent the morning talking with my stockbroker, reading Financial Times, Invesor’s Business Daily, Wall Street Journal, The Street.com, CNBC news, and Bloomberg.com. After deftly making a few trades (and yes, I’m buying Big Pharma stocks these days), I opened Pharmalot. At least your post showed that you were reading mine. And even though the shark was killed in “Jaw’s”, there were others to come along later (i.e. “Jaws” sequels).
Thus the market will always be there. There are those like me, willing to take the risk of putting my toe in the water, and also smart enough to pull it out when that nasty shark comes swimming along.
Todd Wilkinson
Nice Harpy…
Why don’t we put these guys and women that know of “no other way” in pharma than the (at very best) slightly sketchy ways that many of us may be familiar with. No more sucking from our pockets - give them a modest place to live, make sure they have a cafeteria to go to, tear them out of the industry into forced retirement.
As long as this type of unethical philosophy is allowed to KEEP RUNNING (this isn’t new…), it’s going to be bad when the “unthinkables” as I will dub them (as unthinkable as to how they sleep at night), it’s going to get awfully messy when medical / age reasons slam the baby boomer employment numbers at once and you have about a half campus of broken scientists with new management, being asked by their direct reports “you mean we have to follow the SOP now???”. Yessir, and guess what? When your numbers from one year are compared to the next, and “plenty of investigating is necessary due to
two yea”, it will not be reported that “analyst’s former management instructed analyst to not perform step 4 … or whatever their “thing” is”
Worse comes to worse, guess who gets fired?
Now THAT’s F’ed up.
Now, with just a little imagination, so much more can be saved if these archaic ways of old are completely stripped from the industry.
Ok, you worked hard, we all like you, now go populate some island somewhere with your buddies, and let those more dedicated, driven, knowledged, and ethical start really running things. Yes, that means no more scapegoats for you, but look at the bright side - no job!!!
Todd Wilkinson
PFE
Glad to hear it, Pharmavet. I bought some PFE recently, and it’s been nothing but a dog in a world of horses. And I had the genius to buy Ford before it was cool!
And now for the lightning round…
M. Black
Harpy,
That kicked @$$!
MB
shytown
It is funny how this topic barely surfaced during the Bush years. Now that the dems are in, NOW let’s clean things up! Better late than never.
This stuff has been going on for decades at ALL big pharma, it’s was status quo to get a Rx by hook or by crook. We as reps had little choice, I say that liberally, but to do what we had to so we were not on the bottem 25% come yr end. Just like Enron, Rank and Yank.
Until you are put in that pressure cooker, it is hard to imagine what you are capable of doing.
With all that said, I do believe CEO’s should face jail time for their infractions. I would add Regional and District mgrs in that boat as well. Historically, there has been no jail time, and we see how well that has worked.
Personally, I would change the way reps are incentivized. No Rx quotas and bonuses. Pay for amount of dr.s consulted on drug’s indications and promote based on advanced C.E. classes on disease state and health care business knowledge.
The day of the Barbies and Kens are over.
Time to get back to our roots and be of actual value to our dr.s and patients. To be a real resource instead of a walking, talking, and sometimes bribing, Rx commercial.
Maybe… Someday…?
Big Red Bruce
As they used to say out West - “String ‘em up. It will teach ‘em a lesson”